The TC declares the Municipal Capital Gains Tax Unconstitutional

On Tuesday, October 26, the Constitutional Court declared unconstitutional the Municipal Capital Gains Tax, which, until now, was collected by the Town Councils and represented a collection of up to 2,500 million euros per year. Although the ruling has not yet been published, the Plenary has annulled this tax because the method calculated the tax base with parameters that did not respect the capital gain that was truly obtained, thus violating the principle of “economic capacity”.

This is the third ruling issued by the TC on this tax. The first one was in 2017 when it declared the unconstitutionality of having to tax situations of non-existent increases in value. The second one was in 2019, when the Plenary declared unconstitutional the cases in which the tax to be paid exceeded the increase in assets.

Finally, in 2021, the total nullity of the tax has been declared as a result of a consultation raised by the Contentious-Administrative Chamber of the TSJ of Andalucía regarding articles 107.1, 107.2 a) and 107.4 of the Royal Legislative Decree 2/2004 which approved the revised text of the Regulatory Law of Local Treasuries.

Although, the sentence has not yet been published, the consequence of declaring the nullity of this tax would mean that the City Councils would have to return the impugned amounts, pending of resolution and that are in the process of claiming by administrative or judicial processes.

Therefore, we recommend that, if you have paid a capital gains tax in the last 4 years and you would like to know if you can claim any amount, do not hesitate to contact us. Once the sentence is published, we will study your case and we will inform you whether or not you are entitled to the refund of any amount.

We are at your disposal!